Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — 9M 2021 Earnings Presentation
59 slides from Engie Energia Chile's earnings presentation, November 2021
Slide 1: Investor Presentation 9M 2021
Investor Presentation 9M 2021
Slide 2: Results & Guidance
f . Results & Guidance
Slide 3: Key messages
3 Key messages Challenging 2021: extreme drought, record high fuel prices and high marginal costs Despite improved 4Q ice-melt prospects and risk mitigation efforts (back-up supply PPAs, better plant performance, spot gas purchases), 2021 results will lag behind revised guidance Advancing in of our
Slide 4: 2021: Working on our reconversion
4 2021: Working on our reconversion To become greener and reduce our supply cost Reshaping our PPA portfolio with green corporate PPAs OUR PERFORMANCE - Contracted portfolio of more than 12 TWh/y – 10-year average life - Balanced regulated vs. unregulated portfolio 2019 2020 LTM 09-21 TOTAL ENERGY S
Slide 5: Our transformation
Our transformation 5 2 GW RENEWABLE PIPELINE, of which 0.7 GW UNDER WAY + 1.3 GW IN DIFFERENT STAGES OF DEVELOPMENT LOS LOROS MONTE REDONDO CALAMA TAMAYA COYA CAPRICORNIO ADVANCED STAGE 46 MWac 82 M W 151 M W 114 MWac 180 MWac 88 MWac 560 M W COD(*) 2019 2020 2021 2022 2023-2024 UNDER DEVELOPMENT AC
Slide 6: Contracted demand: our vision through 2030
Contracted demand: our vision through 6 2030 Renegotiated PPAs (extended lives / decarbonized tariffs) and new green corporate PPAs GWh 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Regulated SING Regulated SIC Free clients-reneg
Slide 7: Drought and high fuel prices posing continued challenges
Drought and high fuel prices posing 7 continued challenges 1Q20 2Q20 3Q20 9M20 1Q21 2Q21 3Q21 9M21 Var. Operating revenues (MUSD) 335.3 322.0 338.7 996.0 332.3 388.5 365.7 1,086.5 9% EBITDA (MUSD) 99.1 103.0 135.7 337.8 66.0 121.7 55.6 243.3 -28% EBITDA margin (%) 29.6% 32.0% 40.1% 33.9% 19.8% 31.3%
Slide 8: Highest marginal costs in +5 years
Highest marginal costs in +5 years 8 Extreme drought, unprecedented fuel prices =>high spot prices SIC-SING Interconnection US$/MWh Average marginal cost 160 @ 220 kV nodes north of Santiago 9M21 average: US$78/MWh Crucero 140 Cardones 120 Quillota 100 2020 average: Annual Average US$39/MWh 80 60 40
Slide 9: 2021 – One of driest hydro years
2021 – One of driest hydro years 9 Aug-Sep rainfall => improved expectation for 4Q21 ice-melt 2,600 Hydro generation in Chile 2,200 1,800 GWh 1,400 1,000 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2019 2020 2021 The Apr-21 – Mar-22 hydrological year is expected to report a ~97% exceedance p
Slide 10: Coal prices at all-time highs
Coal prices at all-time highs 10 4Q21 FWD avg: US$251/Ton US$/Ton Coal price indices 260 220 9M21 average: API 2 (cif ARA) US$104/Ton 180 API 6 (fob 140 Newcastle) 2020 average: 100 US$52/Ton API 10 (fob Puerto Bolivar) 60 Quarterly average 20 O N D J F M A M J J A S O N D J F M A M J J A S O N D J
Slide 11: LNG prices at all-time highs
LNG prices at all-time highs Rising demand due to weather, activity recovery, and suitability for 11 energy transition LNG prices LNG world markets: 40 36 32 • COVID-19-related restrictions led to record low spot LNG prices in May 28 HH 2020 and delays in gas field maintenance and new investment US$
Slide 12: Managing supply risk
Managing supply risk 12 Back-up PPAs, increasing renewable production, securing gas supply Back-up PPAs sufficient to supply ~20% of projected demand under contracts starting 2022 14,000 12,000 10,000 GWh 8,000 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Slide 13: 9M21: High and volatile marginal cost
13 9M21: High and volatile marginal cost A 10-day real example in the north segment of the SEN grid (September 1 to 10, 2021) MW USD/MWh 4,000 200 3,500 180 160 3,000 140 2,500 120 2,000 100 1,500 80 60 1,000 40 500 20 0 0 1 4 7 10 13 16 19 22 1 4 7 10 13 16 19 22 1 4 7 10 13 16 19 22 1 4 7 10 13 16
Slide 14: Physical sales evolution
14 Physical sales evolution Strong demand from unregulated clients; regulated demand showing signs of recovery Unregulated customers GWh 600 500 400 300 200 100 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 2019 2020 2021 GWh Regulated customers 600 500 400 300 200 100 - Jan Feb Mar Apr May
Slide 15: Demand met with generation and energy purchases
Demand met with generation and energy 15 US$/MWh 160 purchases Coal plant decommissioning schedule Unit MW Date % 9M21 supply 140 U14-U15 268 Dec-21 6.7% 120 Average monomic price CTM1-CTM2 334 Dec-24 7.6% 108 USD/MWh 100 9M20: 101 USD/MWh Average fuel & electricity purchase cost 80 72 USD/MWh 60 9M
Slide 16: Our guidance
Our guidance 16 Despite better 4Q ice-melt prospects and risk mitigation efforts, 2021 results will lag behind revised guidance Demand & prices 244 150 - 170 New PPAs 181 75 LDs (**) COVID-19 pandemic Client migration & lower demand 156 440 – 460 (*) 460 455 Marginal cost risks 87 375 Coal & gas pri
Slide 17: Room to finance projects on balance sheet
Room to finance projects on 17 balance sheet 600 MUSD 4.5 4.0 500 TEN 30 3.5 400 3.0 TEN 35 2.5 300 IEM & Port Conversion 14 436 2.0 200 Renewables 1.5 IEM & Port Renewables 196 314 203 Renewables 64 Renewables IEM & Port 1.0 183 Transmission 13 202 100 IEM & Port Transmission 31 78 Dismantling 14 T
Slide 18: Our transformation
y Our transformation
Slide 19: Our transformation: a four-track road
19 Our transformation A four-track road Greening existing corporate PPAs Closing Old Coal Units Restructuring 800 MW/y of long-term Closing 0.8 GW of coal power plants corporate PPAs with mining customers between 2019 and 2024 Converting Newer Coal Units Developing more Wind and Solar Remaining 3 co
Slide 20: Greening existing corporate PPAs
Greening existing corporate PPAs 20 75% of mining PPAs transformed: strong long-term relationships for more sustainable mining Corporate Clients [6.5 TWh] Regulated Clients [5.5 TWh] PPAs EL ABRA 12 TWh CODELCO AMSA GLENCORE FREEPORT OTHER DISCO NORTH DISCO CENTER [2021] Sound portfolio with average
Slide 21: Greening our PPA portfolio
Greening our PPA portfolio 21 Shifting away from coal-price indexation Indexation applicable to contracted electricity and capacity sales (*) 2020 2022 2025 U.S. CPI Gas U.S. CPI U.S. CPI 78% 10% 60% 79% Coal 2,026 MW Gas 1,936 MW Gas 1,820 MW 10% 11% 29% Coal Coal 11% 11% Free clients’ PPAs: Tariff
Slide 22: Generation portfolio transformation
Generation portfolio transformation 22 2018 2025 2.0 GW Renewables 8% 1% 58% + 59% 10% Installed Installed 33% capacity 58% 0.8 GW Coal disconnection 58% capacity 29% 1.9 GW 3.4 GW - 2% Coal Gas Biomass Gas Diesel Renewables Diesel Renewables 0.7 GW Conversion Note: IEM (375MW) started operations in
Slide 23: Renewables acceleration
Renewables acceleration 23 On our way to reach our energy transformation goals 0.7 GW to be in full production by 2022 plus 1.3 GW projects under development 1.3 GW 0.7 GW Under development not yet approved 2019 2020 2021 2022 2023-2026 COD/YEAR (MW) 46 82 265 268 1.3 GW Vientos Loa 48 Monte Redondo
Slide 24: Unit conversion
Unit conversion 24 Allows for full exit from coal, while providing back-up for renewables expansion 2021 2022 2023 2024 2025 2026 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q permits(*), engineering, procurement, off-site preparation outage IEM overhaul 375 MW coal generation +boiler
Slide 25: 151 MWac Calama wind farm
151 MWac Calama wind farm 25 US$160 million investment / 100% energized / COD: 4Q21 Global advance: 99.6% - Main milestones: - 36 WTGs connected and generating - Reliability tests completed - 85.6 GWh injected to SEN since Jun-2021 - Main contractors: Siemens Gamesa (WTGs) & GES (BOP)
Slide 26: 88 MWac Capricornio solar PV plant
88 MWac Capricornio solar PV plant 26 US$ 82 million investment / COD: 2Q22 Global advance: 87.6% - Main milestones: - Main transformer installed - Control room ready for equipment installation - Tracker reinforcement solution in progress - Main contractors: Trina Pro (trackers), Sungrow (inverters)
Slide 27: 114 MWac Tamaya solar PV plant
27 114 MWac Tamaya solar PV plant US$ 81 million investment / Energization: 3Q21, COD: 4Q21 Global advance: 97.6% - Main milestones: - Substation energized - 50% of park injecting to the grid - Mechanical assembly completed - 0.9 GWh injected between 21 and 30-Sep - Main contractors: Trina Pro (trac
Slide 28: 180 MWac Coya solar PV plant
28 180 MWac Coya solar PV plant US$ 137 million investment / Energization: 3Q22, COD: 4Q22 Global advance: 40.4% - Main milestones: - Pole installation works nearly final - Tracker assembly started - Power transformer shipped - Substation structures being erected - Main contractors: Siemens-Ingecoz
Slide 29: Securing land concessions for the development of renewable projects
Securing land concessions for the 29 development of renewable projects Recently awarded slots with excellent potential for hybrid projects Pampa Fidelia and Pampa Yolanda - Two land-use concessions in Taltal (Antofagasta) awarded in public auction - Potential to develop hybrid projects, with up to 1
Slide 30: Environmental permit requests
Environmental permit requests 30 Preparing the ground for future projects VIENTOS DEL LOA LIBÉLULA Approved RCA(1) EID(3) submitted - Wind farm 20 km. SE Calama - 199 MW PV plant north of Santiago - 204.6 MW potential capacity - 423 GWh p.a. generation capacity - 33 turbines x 6.2 MW each - +321k bi
Slide 31: National / zonal transmission projects in execution
National / zonal transmission projects in 31 execution US$ 53 million Total Investment Value Arica y Parinacota Nueva Chiquicamata Antofagasta Capricornio SS expansion Atacama Algarrobal Nueva Chuquicamata (National) Algarrobal (National) Substation +2 x 220 kV transmission line 220 kV sectioning su
Slide 32: National / zonal transmission projects awarded
National / zonal transmission projects 32 awarded Arica-Pozo Roncacho US$ 43 million Total Investment Value Sectioning SS Pozo Almonte SS Tamarugal SS Antofagasta La Negra Pozo Almonte SS Antofagasta By-Pass By-Pass Expansion Albemarle SS Zonal Zonal Zonal Multi-circuit transmission line 2x110 kV, S
Slide 33: Financial update
Financial update
Slide 34: EBITDA evolution
EBITDA evolution 34 Margin compression explained by higher marginal costs and higher fuel prices By main effect In US$ Million 59 8 108 Transmission 67 5 & Gas Insurance Average (BI) realized 127 29 prices Marginal 338 Lower cost Physical energy increase energy purchase EBITDA 1Q21 sales volume 11 2
Slide 35: Net income evolution
Net income evolution 35 Narrower operating margin and one-time financial expenses from sale of PEC receivables (*) By main effect Recurring Results In US$ Million 6 69 10 133 123 Other Depreciation, FX, Make-whole write-offs on early bond redemption 4 75 36 EBITDA Financial expenses Net Income Net b
Slide 36: Net Debt evolution
Net Debt evolution 36 Net debt increase due to CAPEX, dividends, land leases, and operating cash outflows, partly offset by proceeds from sale of long-term receivables Main cash flows In US$ Million 33 8 118 81 Cash Accrued 75 23 payment 1,114 interest / Leases from TEN Income deferred Proceeds 91 (
Slide 37: Healthy financial structure
37 Healthy financial structure Investment-grade ratings: BBB+/BBB NET DEBT/EBITDA @ 3.1 X 3.1 International: 2.8 2.2 Fitch (Jun 2021): BBB+ Stable 1.8 S&P (Jan 2021): BBB Stable 1.3 National scale: Fitch (Jun 2021) AA Stable Feller Rate (Jan 2021): AA- Positive Dec 17 Dec 18 Dec 19 Dec 20 LTM Sep 21
Slide 38: US$41.5 million provisional dividend paid in August 2021
38 US$41.5 million provisional dividend paid DIVIDENDS PAID in August 2021 In US$ Millions 120 100% 112 100% 90% 100 22 81% 72% 93 80% 80 79 70% 7 67 60% 60 56 47% 56 51 50% SHARE PRICE EVOLUTION 17 47 40% 40 12 30%34 30% 30% 30 90 67 30% 30-Sep-21 20 72 20% EECL: CLP 542 (-45%) 20 39 35 13 42 26 10
Slide 39: Key take aways
Key take aways 39 Difficult year due to extreme drought and challenging international environment w/demand-supply imbalance in fuel and equipment markets Despite efforts and risk management measures, results are lagging behind our revised 2021 EBITDA guidance 151 MW Calama wind farm and 114 Tamaya P
Slide 40: Addenda
Addenda
Slide 41: The ENGIE Group
The ENGIE Group 41 A global reference in low carbon energy services FOCUSED ON FOUR GLOBAL BUSINESS LINES AND 20 COUNTRIES - 170,000 EMPLOYEES WORLDWIDE CLIENT SOLUTIONS INFRASTRUCTURE REVENUE BREAKDOWN EBITDA 2020 Supporting the carbon-neutral transition Strengthen our presence across the gas and o
Slide 42: Industry and company highlights
Industry and company highlights 42 As of September 30, 2021, or for the first nine months of 2021 Gross capacity Generation Demand Market share Solar Hydro Wind 8% Engie 8% Hydro 18% 19% Enel SISTEMA 24% Regulated AES Gener Solar 24% 39% 12% ELÉCTRICO Wind 12% NACIONAL 10% 29.7 GW 60.8 TWh 55.9 TWh
Slide 43: ‘SEN’ Sistema Eléctrico Nacional
Sistema Eléctrico Nacional - SEN 43 ‘SEN’ Sistema Eléctrico Nacional 12,811 MW SEN – September 2021 29,770 M W SING 8,837 7,270 MW 1,270 SIC 3,600 3,512 MW 3,310 MW 212 45 2,334 MW 1,382 267 58 1,611 254 (**) 600 46 56 644 2,592 2,901 1,500 1,304 532 MW (*) 1,334 300 350 532 Enel Generación AES Ande
Slide 44: ENGIE Energía Chile
ENGIE Energía Chile 44 A diversified asset base in Chile’s mining region Our operations Our sites Our largest clients TOCOPILLA Coal (269MW) MINING Gas (398MW) 4th largest GenCo in Chile Port 2.3 GW gross capacity 0.4 GW renewables in construction MEJILLONES Coal (711MW) 11.4 TWh sold under PPAs in
Slide 45: Sound contract portfolio
45 Sound contract portfolio 10-year remaining average life (Free clients: 11 yrs. Regulated clients: 9 yrs.) 500 ● Regulated contracts Clients’ credit ratings ● Unregulated contracts Distribution Companies 400 Renegotiated contracts (South SEN) (S&P/Moody’s/Fitch): Average demand (MW) - Codelco: A/A
Slide 46: AMSA (Centinela) PPA
AMSA (Centinela) PPA 46 Renegotiation of existing agreement +new green PPA signed on March 31, 2020 Existing PPA New PPA Esperanza Amendment of existing PPA New 11-year 186MW PPA Centinela 150MW between Inversiones Hornitos 186MW between EECL and Minera El Tesoro 36MW (CTH) and Centinela for its Cen
Slide 47: Long-term contracts
47 Long-term contracts The basis for stable sales and prices Energy sales and prices Energy sales Prices GWh US$/MWh 3,000 150 2,500 2,000 100 1,500 1,000 50 500 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21
Slide 48: Demand supplied with own generation and energy purchases hedged by our installed capacity
Demand supplied with own generation and energy 48 purchases hedged by our installed capacity Renewables 13% Diesel 2% Coal 57% Installed Average supply cost depends on fuel prices, power demand, gas supply, Capacity (*) transmission congestions, renewable output, plant performance and Gas 28% 2,334
Slide 49: Eólica Monte Redondo SpA and Laja hydroelectric plant
Eólica Monte Redondo SpA 49 82MW of renewable capacity acquired on July 1, 2020 MONTE REDONDO WIND FARM - Acquired from ENGIE Latam: US$53 million+cash, on debt-free basis. Approved by independent board members (“Comité de Directores”) 48 MW (24 Vestas V90 WTGs(*), 80m hub height, 90m rotor diameter
Slide 50: Regulatory initiatives under way
50 Regulatory initiatives under way GENERATION DISTRIBUTION Energy transition Electric portability: Flexibility strategy - Energy dealer Accelerated retirement of coal-fired units - New types of energy auctions - Information manager Emission compensation mechanism in green taxes Basic services (cont
Slide 51: Price stabilization mechanism
51 Price stabilization mechanism: US$49.6 million financial cost 9M21 Law #21,185 (Nov-19): Electricity price stabilization mechanism for regulated customers PEC = Adjusted upwards if PEC = Adjusted upwards if Dec 2020 Dec 2025 PEC = Fixed price to PEC = Fixed price to Jul 2023 necessary to avoid ne
Slide 52: Financing activity
Financing activity 52 Securing liquidity and funding for our transformation strategy 2021 – Monetization of PEC receivables (“AR”) 10-yr, 3.4%, US$500 million US$119 million received on 144A/RegS bond US$167 million of monetized ARs - Early redemption of US$400mln - True sale to SPV of ARs related t
Slide 53: EECL, a relevant player in transmission
EECL, a relevant player in 53 transmission Substations 2,330 KMS 24 SUBSTATIONS - 977 MVA 5 Transmission US$ 19.9 MILLION REGULATED REVENUE P.A. substations Generation substations Transmission lines 977 MVA 9% 18 909 2,330 Kms AVI + COMA for National & Zonal systems 91% (in millions of US$) Owned &
Slide 54: Transmisora Eléctrica del Norte («TEN»)
Transmisora Eléctrica del Norte 54 («TEN») Double circuit, 500 kV, alternate current (HVAC), TEN annual revenue per 1,500 MW, 600-km long transmission line old decree: National transmission system interconnecting SIC in USD millions and SING grids since Nov. 24, 2017 at September 30, 2021 FX rates)
Slide 55: Copper industry
55 Copper industry US¢/lb Copper production in Chile ('000 tons) GWh 500 8,000 Copper price LME (US¢/lb) SEN monthly electricity demand 450 7,000 400 6,000 350 5,000 300 250 4,000 5,776 5,761 5,772 5,832 5,787 5,732 5,413 5,557 5,394 5,419 5,434 5,553 5,504 5,321 5,361 5,328 5,263 200 4,904 4,602 4,
Slide 56: Ownership structure
56 Ownership structure Pension Local Foreign 59.99% Funds 12.96% institutions 18.10% institutions 8.30% Individuals 0.65% ENGIE Energía Chile S.A. (EECL) Red Eléctrica Chile S.A. 50% Central Termoeléctrica Central Termoeléctrica Gasoducto Edelnor Transmisora Eléctrica Norandino SpA Transmisión S.A.
Slide 57: EECL organizational structure
EECL organizational structure 57 Shareholders’ Functional assembly committees - Management - Commercial origination Committee of Board of - Development directors directors - Stakeholders & Regulation - Change management - Construction CEO - Portfolio & risk management - COVID 19 crisis committee Int
Slide 58: For more information about ENGIE Energía Chile
For more information about ENGIE 58 Energía Chile +562 2783 3307 inversionistas@engie.com http://www.engie-energia.cl More information on 9M 2021 results in our web page Presentation Addenda Press Release Recorded Financial Report Analyst pack conference audiocast
Slide 59: Disclaimer
Disclaimer Forward-Looking statements This presentation may contain certain forward-looking statements and information relating to ENGIE Energía Chile S.A. (“EECL” or the “Company”) that reflect the current views and/or expectations of the Company and its management with respect to its business plan